• by Danielle Oster , April 24, 2025

Two of the big three beverage companies held earnings calls with investors today to discuss Q1 earnings, their first quarter impacted by the new administration’s erratic approach to tariffs and trade, as well as recent concerns over Supplemental Nutrition Assistance Program (SNAP) benefits, and plans to phase out the use of certain artificial colors in food and beverages.

“We understand that there’s going to be probably a consumer demand for more natural ingredients, and we’re going to be accelerating that transition,” PepsiCo CEO Ramon Laguarta said. “Ideally, we can do this in a very pragmatic, orchestrated way as an industry, and not create unnecessary panic or chaos,” he added. “But we’ll lead that transition, and in the next couple of years, we’ll have migrated all the portfolio into natural colors, or at least provide the consumer with natural color options.”

So far three states -- Arkansas, Idaho, and Indiana -- have made moves to ban candy and soda from being paid for with SNAP benefits, following the Health Secretary’s comments encouraging them to do so (although such changes would be administered by the U.S. Department of Agriculture, and possibly require Congressional approval, according to reporting by NPR). Several other states are expected to follow suit.

“In terms of SNAP,” Laguarta said, “there’s a lot of conversations in different states, and we’re seeing that some of our categories could be exposed to some restrictions. I think this will have a very limited impact on the business as we are calculating today, and we will need to see how the eventual legislation gets implemented. It’s still a lot of unknowns on how this is going to be happening.”

KDP CEO Tim Cofer seemed even more skeptical about any potential impact on the business from SNAP changes.

“When you look at the grocery bill receipts of SNAP recipients and non-SNAP households, they’re actually strikingly consistent, and you see beverages playing an equally prominent role in both sets of households,” Cofer said in response to an analyst question. “SNAP recipients fund part of their grocery bill through SNAP subsidies and part of their grocery bill with their own money.

"We would not expect a significant change to our categories. You asked about our position as an industry and we certainly stand with our industry colleagues to advocate for consumers’ freedom of choice and [treating SNAP recipients] with the same dignity as anyone else."

For both companies, tariffs appeared to be a larger concern. PepsiCo cited tariffs as among the reasons for the update to its full-year guidance, along with  “heightened macroeconomic uncertainty.” KDP projected a one percentage point hit on foreign exchange changes, while anticipating tariff impacts to still be “manageable.”

Leaders for both companies hinted that tariffs could eventually lead to increased prices for consumers.

“We’ll consider all potential mitigations,” Cofer said, “which could include additional pricing actions late in the year to protect our long-term ability to invest and keep this business as healthy as we’ve seen it in Q1.”